In a major move to advance South Africa’s goals to become a global green hydrogen producer, the country’s hydrogen fund SA-H2 secured ZAR 656 million (~USD 37 million) in new investment from state-owned entities—the Public Investment Corporation (PIC), Industrial Development Corporation (IDC), and Development Bank of Southern Africa (DBSA).
“The IDC is proud to invest in SA-H2 to support the development of energy transition and green hydrogen infrastructure in our country. This commitment aligns with our strategic focus on building industrial capacity in emerging sectors, advancing localisation, and unlocking South Africa’s potential to compete globally in the clean energy economy,” said Rian Coetzee, Divisional Executive: Industry Planning & Project Development, of the IDC.
Also known as CI3 South Africa, the SA-H2 Fund is managed by a partnership between leading climate finance investor, Climate Fund Managers B.V. (CFM), and a Dutch development finance institution, Invest International (II). The fund seeks to stimulate the energy transition with a core focus on the green hydrogen value chain, support inclusive economic growth, and drive job creation.
“We are honoured to welcome the PIC, DBSA, and IDC as investors in SA-H2. Their commitments signal strong market confidence in South Africa’s energy transition and green hydrogen potential,” said Andrew Johnstone, CEO of CFM.
“These institutions are backing a new generation of infrastructure – such as the Hive Green Ammonia Plant, that will decarbonise the economy, create green jobs, and enhance long-term competitiveness. SA-H2’s blended finance model unites local and international partners across public and private sectors to deliver the energy transition at scale,” added Johnstone.
The new investment into the fund was announced during the opening of South Africa’s Green Hydrogen Summit in Cape Town. At the event, the SA-H2 Fund also announced its first investment: $20 million in development funding for the Hive Hydrogen Coega Green Ammonia Project in the Eastern Cape.
“The PIC is committed to supporting infrastructure that generates attractive commercial returns while delivering inclusive, broad-based economic impact; in line with our client mandates. SA-H2 offers a compelling, well-structured opportunity to participate in a high-impact sector that advances job creation, green industrial development, and a just transition. These priorities align with our mandate to advance inclusive, sustainable growth and long-term national resilience,” said Kabelo Rikhotso, Chief Investment Officer of PIC.
The blended finance nature of the hydrogen fund
The SA-H2 hydrogen fund will blend public and private capital through a single platform. It includes a Development Tranche, offering early-stage risk capital and technical assistance to advance projects toward financial close. In 2024, SA-H2 secured its first commitments, raising ZAR 1.4 billion (~USD 80 million) from Invest International and the European Commission.
The hydrogen fund also features Blended Equity Tranches, designed to finance project construction through a tiered capital structure. The first tier, Tier 1 (First Loss Tranche), absorbs construction-stage risk, while Tier 2 (Junior Equity Tranche) offers enhanced returns with support from the other tiers. The final tier, Tier 3 (Senior Equity Tranche), provides moderate risk-adjusted returns backed by risk mitigation instruments.
“Our investment in SA-H2 reflects DBSA’s mission to advance a just energy transition by unlocking infrastructure that enables sustainable, inclusive growth. The facility’s blended finance model allows us to deploy our capital in a way that catalyses private sector investment at scale. This is a strategic opportunity to drive development in a critical new sector while supporting South Africa’s long-term infrastructure goals,” Lebogang Seperepere, Acting Group Executive Project Preparation Division, of the DBSA said.
